Innovative Industrial Properties Archives - Green Market Report

It’s time for your Daily Hit of cannabis financial news for May 21, 2019.

On the Site

New Regime Will Impact Aphria Stock

No one who follows Aphria Inc. (NYSE: APHA ) stock should have been surprised that the company’s president, Jakob Ripshtein, resigned on May 14. Ever since interim CEO Irwin Simon was appointed Independent Chair of Aphria’s board in December, it was only a matter of time before Simon, the entrepreneurial founder and former CEO of Hain Celestial (NASDAQ: HAIN), would play a more prominent role at the Canadian cannabis company.

In Other News

Innovative Industrial Properties

Innovative Industrial Properties, Inc. (NYSE: IIPR) announced that it had closed the acquisition of a property containing two buildings totaling approximately 266,000 square feet of industrial space for $13 million. IIP has also entered into a long-term, triple-net lease agreement with a subsidiary of Green Leaf Medical, LLC (Green Leaf Medical). Green Leaf Medical has already redeveloped roughly 103,000 square feet of the space for medical cannabis cultivation and processing.

Body and Mind

Body and Mind Inc. (CSE: BAMM) (OTC Pink: BMMJ) has closed a previously announced private placement offering. M Partners Inc. acted as lead agent on behalf of a syndicate of underwriters, which included PI Financial Corp. Body and Mind sold 11,780,904 units of the company at a price of C$1.25 per unit for gross proceeds of C$14.72 million. “The financing was originally planned for gross proceeds of up to CAD$10 million and we are extremely pleased with the increased interest which will allow us to accelerate our growth as a multi-state operator,” commented Body and Mind Director Robert Hasman.

48North

After the markets closed yesterday, 48North Cannabis Corp. (TSXV: NRTH) released its financial results for the three and nine month period on March 31, 2019. Revenue for the quarter was C$689,000 and C$4.3 million for the nine months period. EBITDA was C$78,000 for the quarter and C$696,000 for the nine month period. The net loss for the nine month period was C$3.3 million.

Medicine Man Technologies

Medicine Man Technologies, Inc. (OTCQX: MDCL) today announced the release of their financial results for the first quarter of 2019. Year-over-year, revenue grew by 63% to approximately $2 million. Driving much of this growth was an increase in product sales, which rose from $459,335 to $1.5 million. The net loss for the quarter was $2.9 million. “With the recent progress of HB19-1090 and the strong overall momentum within the cannabis industry, we came in this quarter with record revenues and strong sales from our products division,” said Andy Williams, Co-Founder and CEO of Medicine Man Technologies. “Looking ahead, we have several significant events that include our pending acquisitions of Medicine Man Denver and MedPharm Holdings, LLC, which will put us on a major growth trajectory and create compelling value add for our shareholders.”

IIPR recorded net income attributable to common stockholders of approximately $2.3 million for the quarter, or $0.24 per diluted share, and adjusted funds from operations (AFFO) of approximately $3.6 million, or $0.38 per diluted share. AFFO represented an increase of 344% from the prior year’s quarter.

The company paid its seventh consecutive quarterly dividend of $0.35 per share on January 15, 2019, to stockholders representing a 40% increase from the prior year’s quarter. IIPR also declared its eighth consecutive quarterly dividend of $0.45 per share, which is expected to be paid on April 15, 2019, to stockholders of record as of March 29.

In October 2018, IIP completed an underwritten public offering of 2,990,000 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 390,000 shares, resulting in net proceeds of approximately $113.9 million.

After the quarter ended, IIPR’s operating partnership subsidiary completed a private of offering in February 2019 of $143.75 million aggregate principal amount of 3.75% exchangeable senior notes due 2024, which includes the exercise in full of the initial purchasers’ option to purchase additional Notes, resulting in estimated net proceeds of approximately $138.4 million.

The company gave the following update about its portfolio in a statement. As of March 13, 2019, IIP owned 13 properties that were 100% leased to state-licensed medical-use cannabis operators and comprising an aggregate of approximately 1,128,000 rentable square feet (including approximately 159,000 rentable square feet under development/redevelopment) in Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Ohio and Pennsylvania, with a weighted-average remaining lease term of approximately 14.3 years.

IIPR had invested $161.2 million in the aggregate (excluding transaction costs) and had committed an additional $37.7 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. IIPR’s average current yield on invested capital was approximately 15.1% for these 13 properties, calculated as the sum of the initial base rents, supplemental rent (with respect to the lease with PharmaCann LLC at one of IIPR’s New York properties) and property management fees (after the expiration of applicable base rent abatement periods), divided by IIPR’s aggregate investment in these properties (excluding transaction costs and including the aggregate potential tenant reimbursements of $37.7 million).

Innovative Industrial Properties, Inc. (IIPR) stock fell 4% in aftermarket trading when the cannabis real estate company missed expectations for its first-quarter earnings. The company reported net income of $607,000 or $0.09 per share, while the average analyst estimate for the quarter according to Yahoo Finance was for $0.18, a miss of nine cents.

Rental revenue for the quarter was $2.7 million, an increase of 114% over last year for the same time period, but the average estimate was for revenue of $3.06 million. For the first quarter 2018, funds from operations and FFO per diluted share were approximately $1.1 million and $0.18, respectively; and AFFO and AFFO per diluted share were approximately $1.4 million and $0.23, respectively.

IIPR is one of the rare cannabis companies that pay a dividend and this quarter it paid its fourth consecutive quarterly dividend of $0.25 per common share on April 16 to stockholders of record as of March 29, 2018. According to a company statement, IIPR also completed an underwritten public offering of 3,220,000 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 420,000 shares, resulting in net proceeds of approximately $79.3 million. That money will be used to invest in additional properties.

Portfolio Update

The cannabis company REIT owns six properties located in Arizona, Maryland, Minnesota, New York and Pennsylvania, totaling approximately 706,000 rentable square feet, which were 100% leased with a weighted-average remaining lease term of approximately 14.4 years. In a statement, IIPR said that it had invested approximately $75.4 million in the aggregate and had committed an additional approximately $6.5 million to reimburse certain tenants for tenant improvements at its properties. The company’s average current yield on invested capital is approximately 15.7% for these six properties.

Since the quarter ended it has acquired an 89,000 square foot property in Pennsylvania for approximately $5.8 million that Vireo will use to operate a medical-use cannabis cultivation and processing facility. In addition to that, IIPR has entered into an agreement to purchase one property for a total investment of $3 million and signed three non-binding letters of intent for three properties representing a total expected additional investment by the company of approximately $38 million.

Stock Performance

The stock fell 4% to $32.50 after the earnings announcement and the company did not plan on hosting a conference call. This isn’t too far from the 52-week high of $36.88 and way above the year’s low of $15.72. Two analysts follow the stock with an average price target of $33.75.

Innovative Industrial Properties Innovative Industrial Properties (IIPR), a provider real estate capital solutions for the medical cannabis industy, announced today that it has closed on the acquisition of a 89,000 square foot property in Scranton, Pennsylvania, for a price of approximately $5.8 million. The tenant of the property is a subsidiary company owned by Vireo Health, Inc., and is expected to reimburse Innovative approximately $2.8 million for improvements to the building. “We are very pleased to close on this third transaction with Vireo Health in Pennsylvania, projected by many to become one of the largest medical-use cannabis markets in the country,” said Ben Regin, Director of Investments and Finance for Innovative in a statement.

Canopy Growth Corporation

Canopy Growth Corporation (WEED) announced a partnership between its affiliate and biopharmaceutical research arm Canopy Health Innovations and drug research pioneer Lady Amanda Feilding and the Beckley Foundation (“Beckley”). Named Beckley Canopy, the partnership will work towards the research and development of clinically approved cannabis-based medicines. All profits from the work will go towards scientific research and policy work of the Beckley Foundation.”We are delighted to have formed this partnership with Beckley. They have been leading the way in drug policy reform and cannabis research for more than two decades and we feel that our skill-sets complement each other perfectly. This is a unique opportunity to expand our operations, conduct world-class research, and meet the needs of doctors and patients around the world,” said Canopy Health CEO, Marc Wayne.

Namaste Technologies Inc.Namaste Technologies Inc. (N) announced that it has signed an amended Letter of Intent (LOI), dated April 4, 2018. Under the amended LOI, 2624078 Ontario Inc. will apply for an ACMPR license to cultivate medical cannabis and to sell medical cannabis oil. If the application is approve, the company will be able to test and develop its own cannabis strain for Cannmart. Additionally, 2624078 Ontario Inc. will rename itself Infinite Labz. “We’re pleased to have signed the amendment to the LOI as per our discussions with Namaste. We believe that our company and Namaste will see great value in this partnership and in operating both the LD and LP license from the same facility. There are many synergies that are evident between both parties and the addition of an ACMPR license to the facility at 7 Canso Road will solidify our position becoming a premier provider for medical and recreational cannabis oils and we look forward to a bright future with Namaste,” commented 2624078 Ontario Inc. president, Daniel Stern.

Innovative Industrial Properties Inc. (IIPR) reported fourth-quarter earnings of 7 cents a share and highlighted the steps it has taken since becoming a publicly traded company, perhaps paving the way for more small and mid-cap cannabis companies to do the same.

Innovative, which trades on the New York Stock Exchange under the ticker “IIPR,” said in a statement it earned 7 cents a share on $2.3 million in revenue. The commercial real estate company also said that adjusted funds from operations (AFFO), a widely used measure for real estate organizations, was 23 cents a share in the quarter.

During the quarter, Innovative said it acquired a medical-use cannabis cultivation and processing facility in Arizona with a subsidiary of The Pharm in a sale-leaseback deal. The total amount spent was $18 million, including $15 million for the purchase.

It also acquired two other medical-use cannabis cultivation facilities with similar transactions, signing deals with Vireo Health for facilities in New York and Minnesota. The combined cost for the two facilities was $8.4 million, including $1 million spent on tenant improvement costs.

The acquisitions bring Innovative’s property portfolio to five, spread across the country. Totaling 617,000 square feet, all of the properties are 100 percent leased. The average length left on the leases is approximately 14.7 years, the company noted in the statement.

As of the end of the year, Innovative said it had invested $68.3 million in the properties, with an additional $5 million for tenant improvements at the various properties.

The company also noted its fourth-quarter dividend was 25 cents a share, a 67 percent sequential increase. The dividend was paid on Jan. 16, 2018 to shareholders on record as of Dec. 29, 2017.

Innovative’s shares yield 3.77 percent at current levels, significantly more than the 2.77 percent yield on a 10-year U.S. Treasury bond.

San Diego-based Innovative also said that it had sold an additional 3.22 million shares in a public offering after the quarter closed, giving the company an additional $79.3 million to be used for general corporate purchases.

Innovative shares closed at $26.32 on Wednesday, up 1.9 percent. Shares of the company have fallen nearly 30 percent since the start of the year.

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis